way the performance of the business is managed and it should link with other key l processes such as business strategy, employee development, and total quality management.
2-1 Vertical integration
Integration is achieved vertically with the business strategy and business plans and] goals. Team and individual objectives that support the achievement of corporate goals are agreed. These take the form of interlocking objectives from the corporate level to the functional or business unit level and down into teams and the individual level. Steps need to be taken to ensure that these goals are in alignment. This can be a cascading process so that objectives flow down from the top and at each level team or 1 individual objective are defined in the light of higher-level goals. But it should also be a bottom-up process, individuals and teams being given the opportunity to formulate their own goals within the framework provided by the overall purpose and values of the organization. Objectives should be agreed, not set, and this agreement should be reached through the open dialogues that take place between managers and
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individuals throughout the year. In other words, this needs to be seen as a partnership in which responsibility is shared and mutual expectations are defined.
2-2 Horizontal integration
Horizontal integration means aligning performance management strategies with other HR strategies concerned with valuing, paying, involving and developing people. It can act as a powerful force in integrating these activities.
BACKGROUND TO PERFORMANCE MANAGEMENT
The concept of performance management has been one of the most important and positive developments in the sphere of human resource management in recent years. The phrase was first coined by Beer and Ruh in 1976 but it did not become recognized as a distinctive approach until the mid-1980s, growing out of the realization that a more continuous and integrated approach was needed to manage and reward performance. All too often, crudely developed and hastily implemented performance-related pay and appraisal systems were not delivering the results that, somewhat naively, people were expecting from them.
Performance management has risen like a phoenix from the old-established but somewhat discredited systems of merit rating and management by objectives. Many of the more recent developments in performance appraisal have also been absorbed into the concept of performance management, which aims to be a much wider, more comprehensive and more natural process of management. Performance appraisal too often operates as a top-down and largely discredited bureaucratic system owned by the personnel department rather than by line managers.
THE PROCESS OF PERFORMANCE MANAGEMENT
Performance management is a continuous and flexible process that involves managers and those whom they manage acting as partners within a framework that
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.Sets out how they can best work together to achieve the required results. It focuses on future performance planning and improvement rather than on retrospective performance appraisal. It provides the basis for regular and frequent dialogues between managers and individuals or teams about performance and development needs. Performance management is mainly concerned with individual performance and development but it can also be applied to teams.
Performance management reviews provide the inputs required to create personal or team development plans, and to many people performance management is essentially a developmental process and they prefer to talk about performance and development reviews rather than performance management. Performance reviews can, however, produce data in the form of individual ratings, which may be used as the basis for performance-related pay decisions. There are, however, strong arguments against linking performance management with performance-related. Performance management is a process for measuring outputs in the shape of delivering performance compared with the expectations expressed as objectives. In this respect, it focuses on targets, standards and performance measures or indicators. But it is also concerned with inputs - the knowledge, skills and competencies required to produce the expected results. It is by defining these input requirements and assessing the extent to which the expected levels of performance have been achieved by using skills and competencies effectively that developmental needs are identified.
Performance management is concerned with improving individual and team performance. This chapter provides an overview of the key performance manage- ment activities and then deals with the main performance management processes of performance agreements, managing performance throughout the year, performance reviews, documentation, and its introduction and evaluation (Armstrong, 2005). Performance management can be described as a continuous self-renewing cycle, as illustrated in Figure 2The main activities are:
Role profile, in which the key result areas and competency requirements are agreed.
The performance agreement or contract, which defines expectations - what the individual has to achieve in the form of objectives, how performance will be measured and the competencies needed to deliver the required results. This could be described as the performance planning stage.
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The personal development plan, which sets out the actions people intend to take to develop themselves in order to extend their knowledge and skills, increase their levels of competence and to improve their performance in specified areas. This is the performance development stage.
Managing performance throughout the year, which is the stage in which action is taken to implement the performance agreement and personal development plan as individuals carry on with their day-to-day work and their planned learning activities. It includes a continuous process of providing feedback on performance, conducting informal progress reviews, updated objectives and, where necessary, dealing with performance problems and counseling.
Performance review, which is the formal evaluation stage when a review of performance over a period takes place, covering achievements, progress and problems as the basis for a revised performance agreement and personal development plan. It can also lead to performance ratings.
82 Figure 2:The performance management cycle